Short the dip and buy the rip? What FOMC outcomes reveal about Bitcoin price action

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Ah, Bitcoin. The cryptocurrency that makes you feel like a financial genius one day and an utter fool the next. This past Tuesday, Bitcoin (BTC) shot up over $94,000, just a day before the Federal Open Market Committee (FOMC) was to make its interest rate decision. If you’re a trader, your stomach probably dropped-because, as history has shown, that’s when volatility tends to make a dramatic entrance. 🎭

Now, let’s get into it: 2025 has been quite the rollercoaster for BTC around FOMC meetings. Traders love to price in what they think is coming. It’s like they’ve already read the script before the movie is even filmed. This front-running by traders can make the FOMC decision itself feel like an afterthought. Spoiler alert: It rarely is.

Key takeaways:

  • Bitcoin has historically sold off after most FOMC events, including rate cuts. It’s like the universe’s cruel joke: the moment you think you’re winning, the rug gets pulled. 🙃

  • BTC’s biggest inflows and leverage tend to build up right before FOMC meetings, thinning out spot liquidity and making price volatility a spectacle after the Fed speaks. 🎢

FOMC outcomes highlight a unique Bitcoin price pattern

If you’ve been paying attention, you’ll know that Bitcoin’s reaction to the FOMC meetings in 2025 has been anything but predictable. There’s been this uncanny pattern: anticipation drives the price up, and then the post-event chaos begins. It’s like waiting for the punchline of a joke that never lands. Let’s break it down, shall we?

  • Jan. 29 – No change: -4.58%

  • March 19 – No change: +5.11%

  • May 7 – No change: +6.92%

  • June 18 – No change: +1.48%

  • July 30 – No change: -3.15%

  • Sept. 17 – Cut 25 bps: -6.90%

  • Oct. 29 – Cut 25 bps: -8.00%

The seven-day BTC returns after each meeting ranged from a cheeky +6.9% to a devastating -8%. So, what’s the common thread? Well, it turns out the most miserable performance happened when the Fed made rate cuts. You might think easing would make everything better, right? But, nope, it just turned out to be a party killer.

Let’s examine this in a bit more detail: it’s not just about the Fed’s decision, but about market structure. Traders seem to price in their expectations so much that when reality hits, it’s a classic case of “buy the rumor, sell the news.” 🚪

1. Positioning dictated outcomes:
Before several meetings-especially those in July, September, and October-traders were piling in. Funding rates and open interest spiked, signaling an overleveraged market. It’s like they were all getting on the same bus, and then-surprise!-the bus breaks down just before the destination.

And when it was all said and done, the “dovish upside” was already built into the price. So, when the FOMC did its thing, BTC had very little in the tank for a solid rally.

2. Rate cuts produced the largest drawdowns:
When the Fed cut rates, like in September and October, Bitcoin didn’t exactly throw a celebration. Instead, it plunged-by -6.9% and -8% over seven days, respectively. It’s like the market had already stockpiled the “good news” before the announcement, only to find out the party was over. 💸

3. Priced-in movement signaled fragility, not stability:
As soon as the market was sure about what the Fed would do, volatility took a nap, only to wake up and wreak havoc once the decision was out. Traders scrambled to adjust their positions, creating all kinds of short-term dislocations. Crypto analyst Ardi predicted just this, saying:

“History will be on the side of gravity tomorrow. If we repeat the average drop (~8%), Bitcoin is due to revisit the $88k line of defense before any continuation up.”

So, what’s the takeaway? FOMC events don’t seem to be the magical catalysts that will drive Bitcoin to the moon. Instead, they’re more like necessary pit stops where traders get to unwind all that overzealous positioning. And yes, even if the Fed goes all dovish on us, it doesn’t mean BTC is going to moonwalk into a bull market.

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2025-12-10 19:45